DISQUALIFIED DIRECTORS – REMEDIES AVAILABLE

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During the months of June – August 2017, the Registrars of Companies have struck off the names of 200,000 (Two Lakhs) Companies under section 248 of the Companies Act, 2013 from their registers. The list is available on the websites of various RoCs. In continuation, Prime Minister Mr. Narendra Modi in his speech at ICAI on CA day has hinted for scrutiny of 300,000 (Three Lakhs) Companies, which can be struck off u/s 248(1) in future.

As a result of the above the Directors of the said Companies have been disqualified as per section 164 of the Act which has restricted them from accessing their Companies bank accounts.

Also the Ministry of Corporate Affairs (MCA) has blocked the DINs of all the disqualified directors under Companies Directors Identification Number Rules, 2013 which has resulted in inability to file forms in the struck off companies and non-filing of annual forms of active Companies in which the Disqualified Director is a Director.

Further, for appointment of new Directors in place of Disqualified Director on account of vacation of office, Form DIR-12 is required to be filed with ROC. The form DIR-12 for new Director is required to be filed with DSC of old (Disqualified) Directors but since the filing of such form with DSC of ole (Disqualified) Directors is presently blocked by MCA, the new Directors are not being appointed to make the default of pending annual filing good?

So, is there any remedy available to such Disqualified Directors?

The Hon’ble Madras High Court, Hon’ble Delhi High Court and Hon’ble Hyderabad High Court while entertaining the writ petitions filed by some of the Disqualified Directors found that the disqualification of the Directors and blocking of their DINs has been done without following proper procedure and against principles of natural justice and thus passed interim orders directing the respective RoCs to restore their DIN Numbers.

Also, Ministry of Corporate Affairs has introduced a scheme namely “Condonation of Delay Scheme, 2018” in order to facilitate the disqualified directors of the defaulting companies (other than the companies which have been stuck off/whose names have been removed from the register of companies under section 248(5) of the Act). And the companies whose names have been struck-off from the register of companies and which have filed applications for revival under section 252 of the Act up to the date of the scheme, the disqualified Director’s DIN shall be re-activated only on NCLT’s order of revival subject to the company having filing of all overdue documents.

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